Contact us FSP. Complaint enquiries Monday to Friday from 9am - 5pm AEST (mobile charges apply)

Transcription

1 How we can help Annual Report on Operations 2013

2 Contact us Complaint enquiries Monday to Friday from 9am - 5pm AEST (mobile charges apply) FSP Membership office Monday to Friday from 9am - 5pm AEST Overseas TTY users Speech & hearing impaired Speak and Listen Internet Relay Service: connect to and ask for Telephone interpreter or contact us to have an interpreter arranged Fax Complaints Membership Post PO Box A252 Sydney South NSW info@cosl.com.au Online complaint form Complaints can be made by using our online complaint form at More information Visit for information on our processes including complaint decisions, recommendations, position statements and determinations Copyright Credit Ombudsman Service Limited ABN PO Box A252 Sydney South NSW 1235

3 about us contents About Us 2 highlights xx 2 about xx 3 the chairman s foreword xx 4 the ombudsman s overview xx 6 our people xx 9 10 the board xx 12 Our Work xx our core business 12 xx 13 participating FSPs xx 14 enquiries xx 15 complaint processes xx 18 Complaints xx demographics / consumers 19 xx categories - purpose and product 22 xx complaints by sector 24 xx complaints in progress 35 xx resolution - complaint stages 36 - outcomes jurisdiction xx 41 Case Studies xx Systemic Issues and Serious Misconduct 47 xx 50 Complaint Report xx annual complaint report 53 xx Engaging with our Stakeholders 58 xx 1

4 about us our year - highlights 3,763 3,292 complaints received complaints closed 37% increase from previous year 28% increase from previous year See page 18 See page 36 20,506 enquiries received 30% increase from previous year See page 14 17,091 participating financial services providers 0.7% increase from previous year See page % of complaints resolved with a positive outcome for consumers See page 37 60% of complaints resolved within 3 months See page 36 79% of complaints resolved within 6 months See page 36 32% of complaints relate to financial hardship See pages systemic issues and instances of serious misconduct identified See page 47 2

5 about us about The Credit Ombudsman Service Limited () is approved by the Australian Securities and Investments Commission (ASIC) to operate an external dispute resolution (EDR) scheme in the financial services industry. We provide consumers with access to an independent, impartial and fair scheme. Our processes are informal and provide consumers and financial services providers (FSPs) with an alternative to legal proceedings. We investigate each complaint and assist the parties to reach a fair outcome. Our services are free to consumers. About 17,000 FSPs participate in our scheme, including finance brokers, non-bank lenders, mutual banks, credit unions, building societies, motor vehicle finance providers, financial planners, timeshare providers, debt purchasers and small amount lenders. We prioritise complaints about financial hardship, given the personal and financial circumstances of affected consumers. We also monitor and take action in relation to systemic issues and serious misconduct which we identify in dealing with complaints. 3

6 about us the chairman s foreword Mr Scanlon has an extensive background in financial services with over 20 years in senior management positions, including a significant amount of time in mutual organisations. Mr Scanlon held executive roles at the Australian Unity Friendly Society from 1993 to 1998, whereupon he joined Bass & Equitable Building Society as Chief Executive Officer for two years. In 2000, Mr Scanlon became Chief Executive Officer of Tasmanian Trustees Limited, and, following the 2001 merger with Perpetual Trustees Tasmania Limited to form Tasmanian Perpetual Trustees Limited (TPTL), he was appointed Managing Director from December 2001 to November He concurrently held the position of Managing Director of Tasmanian Banking Services, a joint venture between TPTL and Bendigo Bank. During 2009, he was the joint Chief Executive Officer of MyState Limited, the listed company formed to enable the merger of TPTL and MyState Financial Credit Union. In addition to his career in financial services, Mr Scanlon is a director of the Motor Accidents Insurance Board. He was previously a director of the Tasmanian Heart Foundation, Australian Unity General Insurance, Australian Friendly Society, Tasmanian Chamber of Commerce and Industry and Australian Unity Funds Management. Mr Scanlon holds a Bachelor of Business and a Master of Business Administration and is a Fellow of the Australian Institute of Company Directors and CPA Australia. On behalf of the Board of, it is with pleasure that I present the Board s Report on Operations for the year. is an external dispute resolution (EDR) scheme approved by the Australian Securities and Investments Commission (ASIC). As an EDR scheme, we provide consumers and member financial services providers (FSPs) with an alternative to legal proceedings for resolving financial services complaints. We aim to deliver on expectations of our stakeholders by sustaining an active program of continuous improvement in the organisation. So, for example: MARK SCANLON CHAIRMAN OF THE BOARD SINCE MARCH 2011 almost all the recommendations of the independent review of s operations conducted by The Navigator Company have now been implemented (some are of an on-going nature), our implementation of the recommendations of the external review by CACE Partners, management consultants, has contributed to further organisational and process improvements, we are adopting a new edition of our Rules, after due consultation with key stakeholders, to reflect both legislative and regulatory developments in the past twelve months, as well as process improvements in the way we deal with complaints. I am pleased to note that, despite significant growth in the last twelve months, both in terms of membership and complaint numbers, has discharged its remit admirably. 4

7 about us The sometimes challenging decisions the Board and management have had to make on investing in new processes, staff and resources in view of the increasing number of complaints we receive have been justified. I am fully committed to strong corporate governance practices and firmly believe in the benefits an effective board can bring to an organisation. I am confident our non-executive Directors retain independent character and judgement, act in good faith with care and diligence and continue to play an essential role in the composition of the Board due to the skills, knowledge and expertise they bring. This is particularly important in the case of which is required, under the terms of its approval by ASIC, to be independent of both industry and consumers and impartial in its decision-making. Acknowledgments I extend my thanks to my colleagues, Ms Karen Cox and Ms Loretta Kreet (Consumer Directors) and Mr Jon Denovan and Ms Vicky Edema (Industry Directors) for their valuable contribution to s governance and strategic direction. The retirement of Ms Catherine Uhr as Consumer Director last December is a sad loss to. Ms Uhr was a non-executive director of since its inception in 2003 and was responsible for many of its significant achievements over the years. The Board, management, staff and I are indebted to her for her contribution to s development and continued growth over the last nine years. I also thank the Ombudsman, Mr Raj Venga, for guiding through another eventful year and meeting the demands of a constantly evolving EDR landscape. He has built and led the team responsible for this success. I am pleased to note that, despite significant growth in the last twelve months, both in terms of membership and complaint numbers, has discharged its remit admirably. The sometimes challenging decisions the Board and management have had to make on investing in new processes, staff and resources in view of the increasing number of complaints we receive have been justified. Mark Scanlon Chairman I am fully committed to strong corporate governance practices and firmly believe in the benefits an effective board can bring to an organisation. 5

8 about us the ombudsman s overview Mr Venga was appointed as the Ombudsman and Chief Executive Officer (CEO) of the Credit Ombudsman Service in October Mr Venja has been a senior legal professional for over 20 years with considerable financial services experience, both as an in-house lawyer and as the Executive Director of Australian Association of Permanent Building Societies. It has been about three years since the National Consumer Credit Protection Act 2009 (NCCP Act) came into operation. The NCCP Act requires persons who engage in credit activities to join an ASIC-approved EDR scheme, such as, as a condition of their licence or authorisation. The initial surge in, and more than doubling of, our membership numbers since then appears to have now stabilised at about 17,000 financial services providers (FSPs). However, we expect another significant surge in membership in the next 24 months due to recent legislative changes allowing accountants to apply for a limited Australian Financial Services Licence in order to, among other things, provide financial advice relating to self-managed superannuation funds. This will require them to join an ASIC-approved EDR scheme, such as. COMPLAINT VOLUMES RAJ VENGA OMBUDSMAN AND CHIEF EXECUTIVE OFFICER SINCE OCTOBER 2006 Our complaint numbers have, however, continued to increase (37% in the last 12 months), albeit at a less dramatic pace than in previous years. This has brought its own challenges in terms of ensuring adequate staff resourcing and maintaining acceptable timelines. Indeed, in the past 12 months, we have undergone an organisational re-structure, streamlined our processes further and increased staff numbers by 40% to meet the increased workload. The legislative landscape has been nothing short of dynamic. Significant law reform in relation to financial advice, credit and privacy, while aimed squarely at industry and intended to benefit consumers generally, has also had implications for us in our case management and training. TIMELINES The time it takes us to resolve a complaint varies from complaint to complaint, depending on: the level of assistance a particular consumer may require to articulate their complaint or understand what is needed from them, the complexity of the facts and the legal issues involved, the time taken by the parties to provide us with the information requested, the willingness of the parties to engage in our process in good faith, our obligation to allow each party the opportunity to respond to the other s statements, evidence and offers of settlement, and 6

9 about us our overall workload. We strive to be completely transparent and accountable in our reporting to stakeholders. When we report on our timelines, we include the period during which a complaint is addressed by the FSP s internal dispute resolution (IDR) process. A FSP should generally be afforded the opportunity to first address a complaint before it is referred to us. Further, our timelines commence from the time we receive a complaint, not from the time a complaint is first assigned to a case manager. (Some EDR schemes have a preallocation pool where complaints are held in abeyance until a case manager s predefined workload permits the assignment of the complaint to him or her.) TIMELINES FOR ALL COMPLAINTS Despite the 37% increase in the number of complaints we received in the last 12 months (on top of the 38% increase in the previous year), the median number of days it took us to close a complaint was 69 days (previously, 77 days). The average number of days taken to resolve a complaint was 133 days (previously, 139 days), i.e. just over 4 months. Timelines for non-financial hardship complaints 57% (previously, 54%) of non-financial hardship complaints were closed within 3 months of receipt, and 75% (previously, 72%) were closed within 6 months of receipt. Timelines for financial hardship complaints Regrettably, 32% (previously, 36%) of all complaints we receive relate in some way to financial hardship; specifically, the failure of a lender to agree to a payment variation on grounds of financial hardship. This level of financial hardship complaints is similar to previous years and we do not anticipate a reduction in the foreseeable future. The underlying causes of the financial hardship complaints we see are unemployment or reduced income (57%), illness of the borrower or their family member (22%), business failure (7%), relationship breakdown (7%), cost of living, including other debt (4%), interest rate increases (2%) and natural disasters (1%). Despite the increase in the number of financial hardship complaints, as well as the time and care that needs to be taken to assist consumers to deal with these matters (due to their emotive and financially critical nature), the median number of days it took us to deal with a financial hardship complaint was 64 days (previously, 74 days). 24% (previously, 22%) of all financial hardship complaints were closed in less than 30 days and 48% (previously, 43%) of complaints were closed in less than 60 days. The underlying causes of the financial hardship complaints we see are unemployment or reduced income ADDRESSING DELAYS As can be seen, our timelines have started to improve. This is attributable to: our new website (see below), which allows complaints received online to be automatically registered in real time onto our system, proactively engaging with, and explaining our processes to, key stakeholders; in particular, FSPs, consumer advocates and caseworkers, use of the telephone as the preferred method of contact with consumers and FSPs, increasing our case management team and deepening our expertise, re-structuring our organisational settings and better calibrating our workflow, cracking down on unnecessary delays by FSPs who fail to respond to our requests for information by escalating complaints through our process, drawing adverse inferences, and notifying ASIC of recalcitrant conduct, and focusing on resolving older complaints which tend to distort timelines. We are confident that we will see further improvement in our timelines over the next twelve months. INDUSTRY CONCERNS Industry has expressed its frustration at various forums about having to discontinue enforcement action once a complaint is received by an EDR scheme. Common views are that: delays can result in significant cost to a FSP because the security property cannot be sold while the complaint is being addressed at EDR, there should be introduced a maximum time limit for EDR schemes to handle debt-recovery complaints, on the expiry of which the FSP would be free to resume or commence enforcement action, borrowers and their advocates are lodging complaints with EDR as a delaying tactic or negotiating manoeuvre, borrowers are not making payments while the complaint is being heard in EDR, and the borrower s equity is being eroded by delays. ASIC, in releasing the results of a review of the jurisdiction of EDR schemes, confirmed its view on the appropriateness of the existing policy settings. We think this is the correct regulatory response. After all, had the consumer defended the proceedings in court, FSPs would still face the same outcomes: they would not be able to realise the security; they would experience delays in having the case heard in court (and the delays would likely be more substantial than those that might be experienced in EDR); and the borrower s 7

10 about us equity would, consequently, be diminished by the delays, particularly as defaulting borrowers are unlikely to make payments while the case is being heard. It is no answer for a FSP to say that borrowers would not usually defend enforcement proceedings in court. That is precisely why EDR schemes were established and given legislative recognition in the NCCP Act and the Corporations Act 2001: to provide access to dispute resolution as an alternative to lengthy and costly legal proceedings. But we appreciate that delays are in no one s interest. On our part, we will continue to improve our processes and timelines and make EDR as quick and efficient as possible. It is, however, troubling to note that, as far as some FSPs are concerned, all complaints made against them are seemingly vexatious or frivolous and should be closed by without any investigation whatsoever. Others spend a disproportionate amount of time and effort insisting that the complaint is not within our jurisdiction when, on any reasonable interpretation, it clearly is. The attitude demonstrated by these FSPs suggests that their internal dispute resolution (IDR) processes can only be ineffective and possibly intimidating to their clients, which would perhaps explain why the consumer approached us in the first place. Thankfully, the overwhelming majority of FSPs demonstrate a genuine willingness to resolve a complaint in good faith. STAKEHOLDER COMMUNICATIONS complaints related to the same services that involve both privacy and service delivery related aspects. S NEW WEBSITE Our new website is intended to foster more effective communication and engagement with our stakeholders and the general public. For example, consumers are able to easily identify and contact the person nominated by a FSP to deal with complaints. Significantly, where a consumer does not know the identity of the FSP (because they have only been dealing with an employee or former contractor of the FSP), our website will enable the consumer to identify and locate the relevant FSP and refer their complaint to them. If the FSP is unable or unwilling to address their concerns, the consumer can then make a real-time online complaint to us. WITH THANKS I express my sincere appreciation for the ongoing support and teamwork of my staff and the professionalism and commitment they bring to their roles every day. They have handled the pressure of our increased casework and membership extraordinarily well and have continued to deliver services to a very high standard. I would also like to express my appreciation to our directors. Their whole-hearted support and guidance throughout the year has been instrumental in s continued growth and success. As part of our commitment to be transparent and accountable, we continue to meet with and present to a number of our important stakeholders, including: financial counsellors, community legal centres and consumer bodies, regulators, and FSPs and their peak industry bodies. RECOGNITION AS AN EDR SCHEME BY OFFICE OF THE AUSTRALIAN INFORMATION COMMISSIONER is already approved to operate as an EDR scheme by ASIC. As part of the reforms to the Privacy Act 1988, the Australian Information Commissioner is empowered to recognise EDR schemes for the purpose of handling privacy-related complaints. All credit providers are required to be members of a recognised EDR scheme before they are permitted to disclose credit information to a credit reporting body or access such information. If an individual is dissatisfied with the decision of a credit reporting body or a credit provider about their complaint, or about the outcome of an access or correction request, they may complain to a recognised EDR scheme of which the credit reporting body or credit provider is a member. will apply to be recognised as an EDR scheme by the Australian Information Commissioner for the purpose of handling privacy-related complaints. These complaints are often part of a broader complaint about financial services. Our recognition as an EDR scheme by the Australian Information Commissioner will therefore minimise the risk of fragmenting the handling of Raj Venga Chief Executive Officer and Ombudsman It is no answer for a FSP to say that borrowers would not usually defend enforcement proceedings in court. That is precisely why EDR schemes were established and given legislative recognition in the NCCP Act and the Corporations Act: to provide access to dispute resolution as an alternative to lengthy and costly legal proceedings 8

11 about us our people provides consumers and FSPs with an accessible, independent and fair dispute resolution service. Our staff are our greatest asset and consist of experienced professionals who are dedicated and passionate about resolving complaints and providing exceptional service. Operational Chart Chief Executive Officer and Ombudsman Business operations Case Management Case management Finance Stakeholder engagement Front-line enquiries General credit and financial hardship Membership services Communications Conciliations Authorised deposit-taking institutions Policy and compliance Human resources Systemic issues and serious misconduct reporting Financial planning and investments Our staff who are involved in dealing with complaints: Ombudsman The Ombudsman makes a Determination at the final stage of the process if the complaint is not resolved earlier. Case Coordinators Case Officers & Case Managers Team Leaders Head of Dispute Resolution In some instances, Case Coordinators deal with the complaint at the initial stages of the process. This includes collecting the relevant information required for to investigate the complaint. A Case Manager is still assigned to the complaint to oversee the handling of the complaint. Case Officers and Case Managers deal with complaints from receipt to closure unless the complaint is referred to the Ombudsman to make a Determination. Team Leaders oversee the Case Officers and Case Managers in their handling of complaints. Team Leaders review every decision and formal Recommendation made by Case Officers and Case Managers before they are provided to the parties to a complaint. The Head of Dispute Resolution oversees the Case Management department in its handling of complaints. The Head of Dispute Resolution also oversees the investigation and reporting of FSP systemic issues and serious misconduct. 9

12 about us the board LORETTA KREET Consumer Director Since November 2012 Loretta Kreet has been a consumer advocate in credit and financial services law for the past 20 years. She has represented vulnerable and disadvantaged people in community legal centres and Legal Aid Queensland during that time. Loretta is presently a senior solicitor with the consumer protection unit at Legal Aid Queensland. She is a solicitor by training and graduated with law and economics degrees from the University of Sydney. She is a consumer director of, a consumer representative in the Telecommunications Industry Ombudsman council, a member of the Standing Advisory Committee for Consumer Affairs for the Australian Communications Consumer Action Network (ACCAN) and a member on the board of management of Parent to Parent Qld Inc. JONATHAN DENOVAN Industry Director Since December 2004 Jon Denovan is a partner of Gadens Lawyers, one of Australia s largest law firms. For over 40 years Jon has specialised in the finance industry, and acts for many lenders, aggregators, mortgage managers and brokers. In recognition of his contribution to the mortgage industry, Jon was made the first honorary life member of the Mortgage and Finance Association of Australia (MFAA), Australia s peak mortgage and finance industry body. Jon is also the Chair of Trainworks Limited and a director of the Sydney Bus Museum in addition to a number of other business directorships. 10

13 about us Under s Constitution, the Board must comprise an equal number of consumer and industry directors, and an independent chair. The Board is responsible for overseeing the operations of, for ensuring independent decision-making of the Ombudsman and staff of, and for preserving the independence of the scheme and its dispute resolution process. KAREN COX Consumer Director Since January 2012 VICTORIA EDEMA Industry Director Since August 2005 Karen Cox is the Coordinator of the Consumer Credit Legal Centre in Sydney, a community legal centre providing free information, advice, education and legal assistance in relation to credit, debt and banking to NSW consumers, and in relation to insurance, to consumers across Australia. Trained in law, Karen spent the best part of eleven years as a solicitor and legal educator in the community legal sector. She has been the Coordinator of the Consumer Credit Legal Centre for a further 13 years. In addition to managing the Consumer Credit Legal Centre, Karen advocates to government and in the media for improvements in the law and financial services industry practice to assist consumers, especially disadvantaged consumers. Vicky Edema holds an Arts/Law Degree, together with a Diploma in Mortgage Lending from the Securities Institute of Australia. Vicky has over 27 years experience working within the non-bank sector of the mortgage industry. Vicky is the Managing Director of Austral Mortgage Corporation, a well-established mortgage manager in the industry. She is also the past NSW State and National President of the MFAA and has been admitted by its National Council as an Honorary Life Member for her contribution to the industry. 11

14 our work our work our core business WHO WE ARE At the Credit Ombudsman Service Limited (), we provide consumers and small businesses with an accessible, independent and impartial alternative to legal proceedings for resolving their complaints against participating financial services providers (FSPs). We provide our services to consumers free of charge. is a not-for-profit public company. It is not government funded. Rather, it is funded by a combination of membership and complaint fees levied on its participating FSPs. s decision-making process is independent of its FSP members and sectors of the industry. The Ombudsman and staff of are entirely responsible for the handling and determination of complaints and are not subject to external influence by any of s stakeholders. HOW WE WORK INDUSTRY OMBUDSMAN Industry ombudsmen provide independent and impartial external dispute resolution (EDR) services free to consumers. Businesses participating in the scheme cover the costs of ombudsman services. In Australia, legislation requires certain industry operators to participate in an EDR scheme. The term ombudsman originates from the Swedish language meaning commissioner. Historically, ombudsmen were officials appointed by parliament to investigate complaints against the government or its agencies. Almost all complaints are resolved by non-adjudicative means. We resolve complaints through investigation and assisting the parties to reach a fair outcome. Our process is both inquisitorial and consensus-based and focuses on producing a mutually acceptable outcome for the parties. Both FSPs and consumers are afforded an equal opportunity to put forward their cases. This is intended to ensure procedural fairness and promote effective dispute resolution. Where the complaint cannot be resolved by nonadjudicative means, the Ombudsman can make a Determination which is binding on the FSP but only if the consumer accepts the Determination in full and final settlement of the complaint. The Determination includes the Ombudsman s reasons for making the Determination and is published on our website at on a de-identified basis. 12

15 our work participating financial services providers We can deal with complaints about FSPs who are participants of our scheme. 3,240 new businesses joined in As at 30 June 2013, had 17,091 participating FSPs. Consumers can check whether a business is a participant on our website, or by calling us. Businesses are also required to provide consumers with details of their EDR scheme in certain documents like credit guides and financial services guides. The different types of FSPs who participate in include: Lenders including: residential mortgage providers commercial mortgage providers personal loan providers credit card providers small amount lenders pawn brokers Mutual banks, credit unions and building societies Finance brokers Mortgage managers Aggregators Securitisers Lenders mortgage insurance providers Lessors, including commercial equipment finance Retail finance providers, including rental and leases Motor vehicle finance providers, including leases and car loans Debt purchasers and collectors Timeshare providers and financiers Financial planners Managed investment schemes AUSTRALIAN CREDIT LICENSEES AND CREDIT REPRESENTATIVES A business that wants to engage in credit activities (as defined in the National Consumer Credit Protection Act) is required to have an Australian Credit Licence or be authorised as a credit representative of a licensee. To apply for an Australian Credit Licence or be an authorised credit representative, the business is required to be a member of an EDR scheme approved by the Australian Securities and Investments Commission (ASIC), like. Credit activities include providing or assisting consumers with a credit contract or lease for personal, household, domestic or residential property investment purposes. A licensee is responsible for dealing with complaints about their authorised credit representatives. Where a complaint is about a credit representative, we refer the complaint to the credit representative s licensee. Where the licensee is not responsible for the authorised credit representative s complaint (for instance, if the complaint is not about a credit activity), we require the credit representative to respond to the complaint directly. AUSTRALIAN FINANCIAL SERVICES LICENSEES A business that wants to provide financial services as defined in the Corporations Act 2001 is required to have an Australian Financial Services Licence or be an authorised representative of a licensee. To apply for an Australian Financial Services Licence, the business is required to be a member of an EDR scheme approved by ASIC, like. Financial services include providing financial product advice, dealing in a financial product or making a market for a financial product. Financial products include foreign exchange, life insurance, income protection, managed investments and superannuation. Unlike authorised credit representatives, an Australian Financial Services Licensee s authorised representative is not required to have separate membership with an EDR scheme. Any complaints about an authorised representative are referred to the Australian Financial Services Licensee. OTHER 496 FSPs are members of even though they may not be required to under existing legislation. These financial services providers include commercial lenders. 13

16 our work enquiries CONSUMER HELPLINE Our client services team received thousands of calls from consumers who had questions or complaints about a service or product they received from a FSP. We received over 20,000 calls this year, a 30% increase from last year. Consumers can contact on this is a free call from a landline. Where a caller asks for an interpreter or where we consider that an interpreter may be required, we will arrange and pay for a translator to assist with the call. Consumers can also , post or fax us their enquiry, or send us their enquiry through our website. However, most consumers (96%) prefer to contact us by telephone. HOW WE CAN HELP Our client services team provides the following assistance: Giving consumers information about s role. Where a problem stems from a simple misunderstanding between the consumer and the FSP, giving the consumer general information about how they can sort things out quickly with the FSP. Giving consumers general information about the types of complaints we can and cannot deal with. If we cannot assist them with their complaint, we explain why and refer the consumer to another organisation which may be able to assist them. If the consumer has not first given the FSP the opportunity to try to resolve the complaint, we assist by: ENQUIRIES RECEIVED - 5 YEAR TREND providing the consumer with the FSP s complaints contact details, explaining when and how the FSP is required to respond, and informing the consumer that they can make a complaint to if the FSP does not respond within the required time or is not able to resolve their complaint. Giving consumers information on how they can make a complaint by directing the consumer to our online complaint form or ing or posting them a copy of our complaint form. 2008/09 10, /10 10, /11 13, /12 15, /13 20,506 Giving consumers information about the type of information or documents we need to assist them. Giving consumers general information about our processes after they make their complaint. Referring the consumer to a free legal centre or a financial counsellor if they need legal or financial advice about their complaint or circumstances. 14

17 our work complaint processes At any stage of the process, either party can make an offer to settle the complaint MAKING A COMPLAINT Step 1 Resolving the complaint with the FSP The consumer should first refer their complaint to the FSP, giving them an opportunity to address it. Most complaints can be resolved very quickly with a telephone call. We recommend that the consumer: talk to the person they originally dealt with; if the consumer wants to take their complaint further, ask to speak to the FSP s complaints area, ask for a copy of the FSP s complaint procedure and an indication of when they will respond, if the complaint is not one that can be quickly dealt with over the telephone, write to the FSP, keep copies of all s and letters they send to, or receive from, the FSP together with details of all conversations, clearly explain why they are dissatisfied and what they are seeking, provide copies of relevant information such as advertisements or file notes of telephone calls, and ask the FSP to provide a final response to the complaint in writing. Step 2 Making a complaint with If the consumer is not satisfied with the FSP s response or if the consumer does not receive a response from the FSP within 45 days (or 21 days if a default notice has been issued or the complaint is about an application for a hardship arrangement), the consumer can make a complaint to. HOW IS A COMPLAINT RESOLVED/CLOSED Mutually acceptable settlement At any stage of the process, either party can make an offer to settle the complaint. Where it is appropriate to do so, we may also recommend to either party that they make a reasonable offer to resolve the complaint or accept a reasonable offer made by the other party. If an offer is accepted, the complaint is resolved and closed. If either of the parties requires a settlement agreement, or if we consider that one is appropriate in the circumstances, we will prepare a settlement agreement documenting the terms of the agreement. Conciliation conference At any stage of the process, we may recommend that the parties attend a conciliation conference. A conciliation conference allows the parties an opportunity to explore the issues and negotiate a resolution to the complaint with the assistance of an independent conciliator. Complaint is not one that we can consider under our Rules The Rules limit the types of complaints we can consider. At each stage of the process, we review the information made available to us. If we cannot consider the complaint under our Rules, we provide the consumer with the reasons for this. A complaint can be closed at any stage of the process for this reason. The consumer is provided with an opportunity to object to our decision to close the complaint and seek a review. Consumer does not respond to our request for information or a response If we request additional information or a response from a consumer, we inform them when these are required. If a consumer needs more time, they can ask for an extension. Otherwise, if, after attempting to contact the consumer, we do not hear back from them, we assume that the consumer does not wish to continue their complaint and the complaint is closed. Once closed, we will only re-open the complaint in exceptional circumstances. 15

18 about us complaint handling process (other than for financial hardship complaints) BEFORE MAKING A COMPLAINT TO Before making a complaint to, the consumer should first give the FSP an opportunity to resolve the complaint. FSPs that are licensees are required to have an internal dispute resolution (IDR) procedure for handling consumer complaints. The consumer should contact the person they dealt with or the FSP s customer complaints area to discuss the issue and see if it can be resolved. If the complaint remains unresolved, or if the FSP does not respond, the consumer can lodge the complaint with. REGISTRATION When a complaint is made to Every complaint we receive is registered on our system within 48 hours. Most complaints are registered within 24 hours. Once registered, we send an or letter to the consumer acknowledging receipt of the complaint. We also send an or letter to the FSP notifying them of the complaint and reminding them not to commence or continue with enforcement action. We will also ask the FSP for a copy of their IDR response. We review the complaint to see if we require further information from the consumer. If the complaint is one that we can deal with, it will progress to the next stage of our process. INITIAL REVIEW We refer the complaint and, if appropriate, our preliminary assessment to the FSP to provide a further opportunity to respond. We outline the issues that the FSP should address and request specific information that may be relevant. The FSP then has 21 days to address the issues and/or make an offer to settle the complaint. Once received, we refer the FSP's response to the consumer and give the consumer an opportunity to respond. On receiving the consumer's response, the complaint is progressed to the next stage of our process if it remains one that we can deal with. INVESTIGATION We may request additional information from either party until we are reasonably satisfied that we understand all the relevant facts. We may prepare a case summary for the parties which sets out what we see as the key issues and the strengths and weaknesses of each party's case. We may prepare a Recommendation giving the parties our assessment of the merits of the complaint and how it should be resolved. If the complaint is not resolved at this stage, it will be moved to the next stage of our process. DETERMINATION The Ombudsman makes a Determination. The consumer has 28 days to accept or reject the Determination. If the consumer does not accept the Determination, we will close the complaint. The consumer is free to pursue their complaint elsewhere. If the consumer accepts the Determination, the FSP is bound by it. Once the FSP has given effect to the Determination, the complaint is closed. 16

19 about us financial hardship complaint handling process BEFORE MAKING A COMPLAINT TO Before making a complaint to, the consumer should first give the FSP an opportunity to consider their request for a payment arrangement. All lenders are required to have an IDR procedure for handling consumer complaints. The consumer should contact the FSP's complaints area to discuss their circumstances. Contact details of an FSP s complaints area can be found on our website. If the matter remains unresolved or if the FSP does not respond, the consumer can lodge a complaint with. REGISTRATION When a complaint is made to Every complaint we receive is registered on our system within 48 hours. Most complaints are registered within 24 hours. Once registered, we send an or letter to the consumer acknowledging receipt of the complaint. We also send an or letter to the FSP notifying them of the complaint and reminding them not to commence or continue with enforcement action. We will also ask the FSP for a copy of their response to the consumer's hardship request. NEGOTIATION If required, we will request more information from either or both parties. We may negotiate an outcome acceptable to both parties using shuttle negotiation over the phone, or we may enter into detailed written negotiations. We may arrange for the parties to attend a conciliation conference. We will only do so if we consider that it is appropriate in the circumstances and both parties agree to attend. The conciliation conference can be conducted over the telephone or face to face. Alternatively, we may make a formal Recommendation to the FSP that they enter into a particular payment arrangement with the consumer or provide the consumer with some other form of hardship assistance. RESOLUTION If the parties agree on an outcome, we review it to ensure that it is fair and that the terms of the agreement are clearly set out. If the parties cannot agree on an outcome, the Ombudsman may make an Order or Determination. If the parties cannot agree on an outcome and, based on the available information, a payment arrangement or other type of hardship relief is not appropriate, we are unable to assist further and provide reasons for our decision. We also provide the consumer with an opportunity to respond. 17

20 complaints complaints COMPLAINTS RECEIVED COMPLAINTS RECEIVED In , we received 3,763 complaints. This is an increase of 37% from and an increase of 90% from

21 complaints demographics GENDER OF THE CONSUMER In , we received more complaints from men than women. Where a complaint is about a financial service which is jointly held, the consumers will generally nominate one party as the main point of contact. The figures below reflect the main contact s gender. Male 57.5% SMALL BUSINESSES Female 42.5% AGE OF THE CONSUMER The average age of consumers who make complaints is 44 years. Most consumers (53.5%) are in their 30s or 40s. This may be because younger adults are likely to have fewer financial products. Most complaints are made by individuals, however, we are also able to deal with complaints made by small businesses. Small businesses 1.5% The majority of older consumers tend to post their complaints to us rather than using the online complaint form available on our website. To ensure that we are accessible to all consumers, our front-line client services team always offer to post our complaint form to consumers when they indicate that they would like to make a complaint. Individuals 98.5% Age % Under % 20s 14.4% 30s 25.9% 40s 27.6% 50s 19.2% 60s 9.8% 70 and over 2.9% 19

22 complaints WA Complaints 9.5% Enquiries 8.7% Population 10.8% NT Complaints 0.9% Enquiries 0.8% Population 1.0% SA Complaints 6.4% Enquiries 7.0% Population 7.2% QLD Complaints 19.0% Enquiries 20.8% Population 20.1% NSW Complaints 36.4% Enquiries 35.2% Population 32.2% OVERSEAS Complaints 0.3% Enquiries 0.5% VIC Complaints 24.6% Enquiries 23.9% Population 24.8% ACT Complaints 1.3% Enquiries 1.3% Population 1.7% WHO MADE THE COMPLAINTS TAS Complaints 1.6% Enquiries 1.8% Population 2.2% We provide our services to consumers across Australia. The proportion of consumers who make complaints from each state generally reflect the proportion of the total Australian population living in each state. These figures help us monitor whether consumers in each state are aware of our services. Our processes are informal and we do not require consumers or financial services providers (FSPs) to visit us in person to deal with the complaint. Rather, we communicate with consumers and FSPs by telephone, , fax and post. This means that consumers and FSPs from remote locations can also access our services. 20

23 complaints HOW THE COMPLAINT WAS MADE Most consumers made their complaint through our online complaint form. In 2013, we launched our new website. It contains our new online complaint form which is linked to our case management platform. Information inserted by the user is automatically uploaded to our case management platform. This is one of the many initiatives we have taken to reduce the time it takes to deal with a complaint. Online 60.5% Post 17.6% 11.9% Fax 9.0% Telephone 0.9% Walk in <0.1% CONSUMERS WHO WERE REPRESENTED Our processes are informal and consumers generally do not need to be legally or otherwise represented in order to make a complaint with us. This is because our staff are trained to identify whether the complaint is based on a valid cause of action or breach of legislation or industry code, for example, and quantify any loss the consumer may have suffered. During our investigations, we may become aware that a FSP has breached the law, a code of practice or good industry practice, or has acted unfairly towards the consumer, in which case, we will investigate these matters even if they are not specifically raised in the complaint. Conversely, we will take into account any defences or other mitigating factors available to the FSP, even if these have not been raised by the FSP. HOW CONSUMERS COME TO KNOW ABOUT US The figures below assist us in understanding how we can better raise consumers awareness of their ability to make a complaint to us. For more information on our activities, please refer to page 58 on stakeholder engagement. How consumers come to know about us % Government agency 10.2% ACCC Australian Competition and Consumer Commission (1.8%) ASIC Australian Securities and Investments Commission (4.1%) Fair Trading or Consumer Affairs (3.7%) Local Member of Parliament (<0.1%) Other Government agency (0.6%) Consumer group 14.3% Financial counsellor (5.6%) Legal centre (8.7%) Other Ombudsman scheme 25.8% FOS Financial Ombudsman Service (25.0%) Other complaint resolution service (e.g. TIO) (0.8%) Financial services industry 6.4% Industry body (e.g. MFAA, FAA, NFSF) (0.2%) The FSP (5.2%) Other FSP (1.0%) Public information 8.8% Directory (White and Yellow Pages) (0.5%) Media (e.g. newspaper, radio, TV) (0.6%) Web search / Internet (7.7%) Paid services 15.4% Credit repair agencies (10.5%) Solicitor (4.9%) Word of mouth (friend, family) 6.5% Common knowledge 6.1% Other 6.5% CREDIT REPAIR AGENCIES Consumer 85.3% Credit repair company 9.6% Solicitor 1.5% Legal centre 1.4% Financial counsellor 1.2% Other 1.0% joins the Telecommunications Industry Ombudsman (TIO) in supporting recommendations made by the Energy and Water Ombudsman NSW (EWON) to raise awareness of free ombudsman services available to consumers who are thinking about using a credit repair agency. Ombudsman services, including, offer a free and independent way for consumers to have their complaints resolved. FSPs are required to inform consumers about their right to access external dispute resolution (EDR); however, there is no such requirement on credit repair agencies. Credit repair agencies bring credit default and debt disputes to and the other ombudsman schemes seeking a resolution of those disputes and then charge the consumer for doing so. We consider it important for consumers to be informed and understand they can bring a complaint to free of charge. The way we deal with the complaint and the outcomes obtained by the consumers are no different whether they are represented by a credit repair agency or not. 21

24 complaints purpose and product PURPOSE The graph below sets out the number and percentage of complaints according to the purpose for which the financial service was provided. Most complaints are about financial services which were provided for personal or household purposes (86.9%). Purpose Number* % Consumer 3, % First home buyer % Purchase home % Refinance home % Personal 2, % Investment % Purchase investment property % Refinance investment property % Other investment % Business % New business loan % Refinance business loan % CONSUMER First home buyer 1.5 % Purchase home 13.8% Refinance home 5.4% Personal 66.2% INVESTMENT BUSINESS Purchase investment property 4.4% Refinance investment property 0.8% Other investment 3.5% New business loan 4.0% Refinance business loan 0.4% PRODUCT OR SERVICE The table to the side sets out the number and percentage of complaints according to the relevant product or service. Most complaints are about financial services which were provided for personal or household purposes *The 90 complaints we received which were not about FSPs who participated in the process have not been included. Product or service Number* % Commercial loan % Consumer retail finance % Credit cards % Credit repair services % Debt consolidation services 8 0.2% Debt purchased or being 1, % collected Equipment finance % Financial advice % Home loans 1, % Line of credit facilities % Motor vehicle finance % Personal loan % Reverse mortgage % Savings/transactions accounts % Small amount loans % Timeshare % Warranties 7 0.2% Other % 22

25 complaints Types TYPES OF of complaints COMPLAINTS received RECEIVED The number of complaints received about the different categories of FSPs are as follows: Residential lenders and mortgage managers Authorised deposit-taking institutions Number % % % Finance brokers % Debt purchasers and collectors 1, % Financial planners and advisers % Consumer finance providers % Lenders mortgage insurance % providers Commercial lenders % Small amount lenders % Motor vehicle finance providers % Personal loan providers % Timeshare providers and financiers % Other FSPs % Non-members % The next few pages set out the type of complaints which have been made to. These have been divided according to the FSP s business. Often, consumers raise more than one claim in their complaint. The percentages referred to are in relation to the number of claims made by consumers rather than the number of complaints made. 23

26 complaints complaints by sector Residential RESIDENTIAL lenders LENDERS and AND mortgage MORTGAGE managers MANAGERS Residential lenders provide loans to consumers where the loan is secured by a residential property. Some residential lenders do not deal directly with consumers and rely on mortgage managers to manage the loan by, for example, issuing statements and monitoring repayments. The most common claim made in relation to residential lenders and mortgage managers is about financial hardship assistance (31%). A further 8% of complaints relate to a request for time to refinance or sell, or a request for a stay on enforcement action. 0% 5% 10% 15% 20% 25% 30% Hardship application Fees excessive or incorrectly charged Inappropriate finance, including responsible lending and unjustness Time to refinance, sell or other stay on enforcement action Conduct during application process Conduct during loan term Fraud Unconscionable conduct Interest rate too high or interest incorrectly charged Conduct during discharge process Incorrect listing on credit report Breach of duty in exercising power of sale Collections - disputed debt or amount of debt Conduct during collections process Other 24

27 complaints AUTHORISED DEPOSIT-TAKING INSTITUTIONS Authorised deposit-taking institutions include banks, mutual banks, building societies and credit unions. Complaints about building societies and credit unions were about: Product % Savings/transactions accounts 37% Mortgages 30% Credit cards 23% Personal loans 10% Like other credit providers who provide credit facilities, the most common complaint made about authorised deposittaking institutions is about financial hardship assistance (27%). A further 4% relate to a request for time to sell or a request for a stay on enforcement action. We also received complaints about incorrect payment transfers (8%) and unauthorised transactions on debit or credit cards (8%). 0% 5% 10% 15% 20% 25% Hardship application Conduct during application process Conduct during loan or account term Incorrect payment transfers Unauthorised transactions Fraud Incorrect listing on credit report Time to sell or other stay on enforcement action Conduct during collections process Fees excessive or incorrectly charged Inappropriate finance, including responsible lending and unjustness Decision to decline a loan application Other 25

28 complaints FINANCE BROKERS Finance brokers assist consumers in choosing and applying for loans. Most complaints about brokers are in relation to the service provided by the broker; the top two complaints being about the appropriateness of the loan which the broker arranged (17%) and the broker s care, skill and diligence during the application process (17%). Most complaints about brokers are in relation to the service provided by the broker 0% 2% 4% 6% 8% 10% 12% 14% 16% Inappropriate finance, including responsible lending Failure to act with due care, skill and diligence Complaint about a loan fee Misrepresentation/ misleading conduct Brokerage fee disputed Failure to follow instructions Failure to advise of relevant product information Fraud Delay Incorrect listing on credit report Conduct during collections process Unconscionable conduct Complaint about the lender's interest rate Lender's decision to decline loan application Other 26

29 complaints Debts DEBT PURCHASERS purchasers and AND collectors COLLECTORS Debt purchasers buy overdue debts from other businesses, such as overdue credit cards, personal loans and/or telecommunications debts. On the other hand, debt collectors pursue payment of overdue debts on behalf of other businesses. Like credit providers who provide credit facilities, the most common complaint about debt purchasers and collectors was in relation to financial hardship assistance (33%). Due to the nature of the debt purchasers and collectors business, most of the complaints are in relation to collections activity, including complaints about a listing on a consumer s credit report (21%), disputes about whether a debt is owing or the amount of the debt (21%), the FSP s conduct during the collections process (8%) and the FSP not providing notice of arrears or default (6%). 0% 5% 10% 15% 20% 25% 30% Hardship application Collections - disputed debt or amount of debt Incorrect listing on credit report Conduct during collections process Failure to provide notice of arrears or default Original credit provider's conduct Complaint about general conduct Fees or interest excessive or incorrectly charged Other Financial FINANCIAL planners PLANNERS and AND advisors ADVISERS Financial planners and advisers provide financial advice to consumers. The most common complaint made about financial planners and advisers is in relation to the appropriateness of the advice provided (45%). 0% 10% 20% 30% 40% Inappropriate advice Failure to follow instructions Misrepresentation/misleading conduct Fees excessive or incorrectly charged Failure to act with due care, skill and diligence Failure to advise of relevant product information Poor returns on investment Other 27

30 complaints Consumer CONSUMER retail FINANCE finance PROVIDERS providers Consumer finance providers offer loans, leases and/or rental agreements to consumers for household goods. While the most common complaint about consumer finance providers was in relation to a request for financial hardship assistance(16%), this represents about a third of the financial hardship complaints made about other credit providers. The most common complaint about consumer finance providers was in relation to a request for financial hardship assistance 0% 2% 4% 6% 8% 10% 12% 14% Hardship application Incorrect listing on credit report Poor customer service Collections - disputed debt or amount of debt Misrepresentation/misleading conduct Failure to provide notice of arrears or default Failure to advise of relevant product information Fees excessive or incorrectly charged Not adhering to contract terms Faulty product Inappropriate finance, including responsible lending and unjustness Conduct during collections process Complaint about payments Incorrect term in contract Unconscionable conduct Unfair terms Other 28

31 complaints Lenders LENDERS mortgage MORTGAGE insurance INSURANCE providers PROVIDERS Where a loan is not fully repaid from the proceeds of the sale of the security property and the lender makes a claim on its mortgage insurance policy for the shortfall, the right to recover the shortfall is generally assigned to the lenders mortgage insurance provider. Complaints about lenders mortgage insurance providers generally arise when they attempt to recover the shortfall from the consumer. The most common complaint relates to the consumer disputing the debt or the amount of the debt (24%). This is followed by a claim about the original credit provider s conduct (14%). The most common complaint relates to the consumer disputing the debt or the amount of the debt 0% 5% 10% 15% 20% Collections - disputed debt or amount of debt Original credit provider's conduct Hardship application Incorrect listing on credit report Complaint about general conduct Failure to provide notice of arrears or default Fees incorrectly charged Conduct during payout process Conduct during collections process Complaint about payments Other 29

32 complaints Small SMALL amount AMOUNT lenders LENDERS Small amount lenders provide loans for small amounts, usually unsecured and with short terms. Like other credit providers, the most common complaint about small amount lenders was in relation to financial hardship assistance (21%). The second most common complaint was about the appropriateness of the loan, including claims that the loan was not appropriate for the consumer s needs, the small amount lender did not comply with their responsible lending obligations or that the transaction was unjust (19%). The most common complaint about small amount lenders was in relation to financial hardship assistance 0% 5% 10% 15% 20% Hardship application Inappropriate finance, including responsible lending and unjustness Incorrect listing on credit report Fees excessive or incorrectly charged Conduct during loan term Interest rate too high or interest incorrectly charged Conduct during application process Collections - disputed debt or amount of debt Failure to provide notice of arrears or default Unconscionable conduct Conduct during collections process Fraud 30

33 complaints Motor MOTOR vehicle VEHICLE finance FINANCE providers PROVIDERS Motor vehicle finance providers offer loans, leases or hire purchase agreements to consumers for the purchase of motor vehicles. Again, like other credit providers, the most common complaint about motor vehicle finance providers was in relation to financial hardship assistance (32%). 0% 5% 10% 15% 20% 25% 30% Hardship application Inappropriate finance,including responsible lending and unjustness Conduct during loan term Fees or interest excessive or incorrectly charged Incorrect listing on credit report Collections - disputed debt or amount of debt Failure to provide notice of arrears or default Faulty product Failure to advise of relevant product information Complaint about payments Conduct during enforcement action Conduct during application process Conduct during collections process Conduct during discharge process Time to refinance, sell or other stay on enforcement action Unconscionable conduct Unfair terms 31

34 complaints PERSONAL LOAN PROVIDERS Personal loan providers provide loans to consumers for personal use. The loans are usually unsecured. Like other credit providers, the most common complaint about personal loan providers was in relation to a request for assistance because the consumer was in financial hardship (29%). This is followed by complaints about an overdue payment or serious credit infringement which the personal loan provider has listed on the consumer s credit report (15%). complaints about an overdue payment or serious credit infringement 0% 5% 10% 15% 20% 25% Hardship application Incorrect listing on credit report Inappropriate finance, including responsible lending and unjustness Fees and interest excessive or incorrectly charged Complaint about payments Conduct during loan term Collections - disputed debt or amount of debt Unconscionable conduct Complaint about contractual terms Conduct during collections process Conduct during discharge process Other 32

35 complaints TIMESHARE PROVIDERS AND FINANCIERS Timeshare providers operate points-based programs through which a consumer can book accommodation at various holiday locations. Timeshare financiers provide loans to consumers to purchase points in timeshare programs. The timeshare financiers usually take a mortgage over the timeshare points as security for the loan. About half of the complaints received about the industry are about timeshare providers and the other half about the financiers. The most common complaint about timeshare providers and financiers is in relation to the information provided by the timeshare provider at the time of the sale. This includes claims of misrepresentation and/or misleading conduct (22%) and failure to advise the consumer of relevant product information (16%). 0% 5% 10% 15% 20% Misrepresentation/misleading conduct Failure to advise of relevant product information Inappropriate finance, including responsible lending and unjustness Conduct during application process Conduct during contract term Hardship application Incorrect listing on credit report Faulty product Inappropriate financial advice Fees incorrectly charged Unconscionable conduct Failure to provide notice of arrears or default Unfair terms Conduct during collections process Other 33

36 complaints COMMERCIAL CREDIT PROVIDERS Commercial credit providers offer a range of secured and unsecured credit facilities to consumers for commercial or business purposes. These include mortgages, loans, leases and hire purchase agreements. Unlike other credit providers, the most common complaint about commercial credit providers is not in relation to financial hardship assistance (19%), but about the credit provider s conduct during the loan term (26%). 0% 5% 10% 15% 20% 25% Conduct during contract term Hardship application Fees or interest excessive or incorrectly charged Conduct during application process Inappropriate finance Incorrect listing on credit report Conduct during collections process Other Other OTHER financial FINANCIAL services SERVICES providers PROVIDERS Included in this category are credit repair companies and companies who provide debt consolidation services to consumers. 0% 5% 10% 15% 20% Fees excessive or incorrectly charged Failure to act with due care, skill and diligence Failure to advise of relevant product information Collections - disputed debt or amount of debt Failure to follow instructions Not adhering to contract terms Conduct during collections process Customer service Misrepresentation/misleading conduct Other 34

37 complaints complaints in progress AGE OF OPEN COMPLAINTS As at 30 June 2013, almost half of our open complaints were less than three months old. Over two thirds of our open complaints were less than 6 months old. In calculating the time taken to resolve a complaint, we start from the day we receive the complaint, irrespective of whether we have to refer the complaint back to the FSP s IDR procedures. We do this because we think a consumer s perception of how long it takes for an EDR scheme to deal with a complaint starts from the day the consumer makes the complaint. As at 30 June 2013, there were 1,563 open complaints with us. Most of these complaints remain at the earlier stages of our process, with just 12% in the Investigation and Determination stage. This is because our processes are designed to resolve complaints quickly without compromising on the quality of our service or outcome to the consumer. We take an active role at each stage of the process, even at the Registration and internal dispute resolution (IDR) stage. For instance, soon after receiving the complaint, we often inform both the consumer and the FSP of the information and documents we consider relevant to the particular complaint as well as what they should provide to the other party and to us. We may also review the information provided and recommend to the parties what may be a fair outcome. For more information on each stage of the process, please refer to page 16. Time Number % Under 1 month % 1 to 2 months % 2 to 3 months % 3 to 6 months % 6 to 9 months % 9 to 12 months % 12 to 24 months % Over 24 months 4 0.3% Complaint stage Number % Registration and IDR % Registration % Initial Review % Investigation % Determination 6 0.4% 35

38 complaints resolution Complaint stage Most of our complaints are resolved at the earlier stages of our process, with just 8.4% reaching the Investigation and Determination stages. This is because our processes are designed to resolve complaints quickly without compromising on the quality of our service or outcome to the consumer. We take an active role at each stage of the process, even at the Registration and internal dispute resolution (IDR) stage. For instance, soon after receiving the complaint, we often inform both the consumer and the FSP of the information and documents we consider relevant to the particular complaint as well as what they should provide to the other party and to us. We may also review the information provided and recommend to the parties what may be a fair outcome. COMPLAINTS RESOLVED In , we investigated and resolved 3,292 complaints. This is a 28% increase from and a 104% increase from How we resolve a complaint depends on the particular complaint. We prefer to assist the parties to arrive at a mutually acceptable outcome, rather than imposing a decision on them. We do this by investigating the complaint and making informal recommendations to the consumer and FSP as to what might be a fair outcome. However, if the parties are unable to agree on a particular outcome or if the FSP does not accept our informal recommendation, we will proceed to make a decision after fully investigating the complaint. A consumer is not required to accept our decision and is free to pursue other alternatives such as taking legal proceedings against the FSP. If, however, a consumer accepts a decision made by the Ombudsman, the FSP is required to comply with the decision. Complaint stage Number % Registration and 1, % IDR Registration % Initial Review 1, % Investigation % Determination 5 0.2% RESOLUTION TIMES In , 60% of complaints were closed within 3 months (56% in the previous year) and 79% were closed within 6 months (previously, 76%). The median number of days taken to resolve a complaint was 69 days, while the average was 133 days (that is, just over 4 months). In calculating the time taken to resolve a complaint, we start from the day we receive the complaint, irrespective of whether we have to refer the complaint back to the FSP s IDR procedures. We do this because we think a consumer s perception of how long it takes for an EDR scheme to deal with a complaint starts from the day the consumer makes the complaint. Time taken Number % Under 1 month % 1-2 months % 2-3 months % 3-6 months % 6-9 months % 9-12 months % months % Over 24 months % 36

39 complaints outcomes COMPLAINTS WITHIN OUR JURISDICTION AND NOT DISCONTINUED Outcomes achieved 75.1% of the complaints closed in which were within our jurisdiction and not discontinued were resolved by agreement between the parties. A further 2.2% of complaints were resolved in the consumer s favour as a result of a decision made by us. The outcomes reached in these complaints are explained below. Number % of complaints we could deal with % of all complaints Resolved by agreement 1, % 43.0% The complaint is resolved by agreement between the consumer and FSP, resulting in a favourable outcome for the consumer. This may involve : investigating the claims made by the consumer, making informal recommendations to the parties as to how the complaint should be resolved, facilitating negotiations between the parties. We can arrange a conciliation conference if we consider that it would assist the parties reach an agreement, or if the parties have asked for a conciliation conference. Decision made in consumer s favour % 1.3% The complaint was resolved as a result of our formal written decision in the consumer s favour after a full investigation. Before making a written decision, we generally inform the FSP of our position. Most times, the FSP will agree to provide the consumer with the outcome we recommend, the complaint is resolved by agreement and a formal written decision is not required. If the FSP does not accept our informal recommendation, we will make formal written decisions, such as: Expedited Ruling: A Ruling can be made for small claims of less than $3,000. If the consumer accepts the Ruling, the FSP is bound by the Ruling. If the consumer does not accept the Ruling, neither the FSP nor the consumer is bound by the Ruling. The complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. Recommendation: A Recommendation sets out what we consider to be a fair outcome to resolve the complaint. Neither the consumer nor the FSP is bound by the Recommendation. If the consumer and the FSP do not accept the Recommendation, the complaint may be referred to the Ombudsman for a Determination. Determination: A Determination is issued by the Ombudsman in the final stage of the process. If the consumer accepts the Determination, the FSP is bound by the Determination. If the consumer does not accept the Determination, neither the FSP nor the consumer is bound by the Determination. The complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. Decision complaint not substantiated % 13.0% This is one where we make a written decision in the FSP s favour after a full investigation of the complaint. The consumer is provided with our reasons for closing the complaint and an opportunity to object to our decision. 37

40 complaints OUTCOMES REACHED The following types of outcomes were obtained for consumers. The numbers below exceed the number of complaints which were resolved by agreement between the parties and those that were made in the consumer s favour. This is because there are occasions when the consumer rejects the FSP s offer to settle the complaint but we were required under our Rules to close it for some other reason (for example, out of jurisdiction, not made out or inappropriate forum). Number % of total outcomes Additional time given % Apology given 7 0.4% Charges reduced % Compensation given % Credit listing amended or % removed Debt waived % Explanation given % Fees waived % Original decision changed % Payment variation % Refund given % Other % DISCONTINUED CASES 1,062 complaints were discontinued because the complaint was not made against the appropriate FSP, the consumer withdrew their complaint or the consumer did not respond to our communications despite our repeated attempts to contact them. Number % of all complaints Changed respondent % Complaint withdrawn % No response from consumer % 38

41 complaints jurisdiction COMPLAINTS WE COULD NOT DEAL WITH The Rules set out the types of complaints that we can and cannot deal with. Generally speaking, we can deal with a complaint if it is about a FSP who is a member of. Inside jurisdiction Outside jurisdiction In , there were 344 complaints that was not able to consider. This represents 10.5% of the complaints we closed. The reasons for this are set out below, including a very general explanation of our Rules. Jurisdictional reason Number % of all complaints Already decided in a court, tribunal or other forum % If the claims raised by a consumer have already been decided in a court, tribunal or other forum, we are prevented from dealing with the complaint again. Compensation sought exceeds $250,000/$280, % For each claim made by the consumer, can award compensation up to: for complaints received before 1 January 2012, $250,000, and for complaints received after 1 January 2012, $280,000. If a consumer s loss for a particular claim is more than these amounts, we can only deal with the claim if the consumer is willing to limit the compensation they are seeking to these amounts. Complaint made by a third party 8 0.2% We cannot deal with a complaint if the consumer who is making the complaint is not the person to whom the financial services directly relate. For instance, we cannot deal with a complaint made by a borrower s child if the child is not a borrower, mortgagor or guarantor on the loan. The borrower s child can, of course, make the complaint on the borrower s behalf. Decision whether to provide services % We will not deal with a complaint about a lender s decision to, for example: decline a loan application or approve it subject to conditions (for example, approving a lesser loan amount), refuse to release part of the security for the loan or to approve it subject to conditions (for example, requiring lenders mortgage insurance). Inappropriate forum % Where we consider that the complaint would be more appropriately dealt with in another forum such as a court, tribunal or another ASIC-approved external dispute resolution scheme, we may close the complaint and refer the consumer to the other forum. For instance, once a court judgment has been entered into, we cannot overturn or vary the court judgment. Consequently, if a consumer wants to set aside the judgment and have the matter reconsidered, it is more appropriate for them to make an application to the relevant court. Legal advice/information sought 1 <0.1% is a dispute resolution scheme. It is not in the business of providing legal advice. If a consumer does not wish to make a complaint but only wants legal advice or assistance, we refer them to the nearest legal centre. FSP is or becomes insolvent % If during the process, the FSP is in or goes into external administration, we may close the complaint. In doing so, we will consider whether there is any benefit to the consumer if we were to continue to deal with the complaint. 39

42 complaints Jurisdictional reason Number % of all complaints Not consumer or small business, as defined 5 0.2% We can deal with complaints made by most individuals and small businesses, but a person may sometimes not fall within our definition of a consumer. Not a financial service, as defined % Our role is to deal with complaints about the financial services provided by a FSP. We cannot deal with complaints about a service or product provided by a FSP which is not a financial service. Not a participating FSP % We are able to deal with complaints about the 17,000 FSPs who are members of. We cannot deal with a complaint where the business being complained about, their Australian Credit Licensee or their Australian Financial Services Licensee, is not a member of at the time the complaint was made. Not seeking compensation or order 7 0.2% Our role is to assist a consumer to resolve a complaint they have about a FSP. At times, we are asked to monitor or investigate the conduct of a FSP and to issue fines or cancel the FSP s licence if there has been some misconduct. It is not our role to regulate the financial services industry. This is the role of ASIC and these types of complaints are more appropriately directed to ASIC. Previously dealt with by 9 0.3% Except where the consumer is making a financial hardship application, we will only deal with the same complaint once. Six years elapsed 5 0.2% There is a time limit within which complaints need to be made; generally, within six years of when the consumer first becomes aware (or should have become aware) that they had suffered a loss. Transaction outside Australia 1 <0.1% We will only deal with complaints where the contract or obligation arises under Australian law. Where the complaint relates to a security over property, we will only deal with the complaint if the security property is in Australia. Unable to locate FSP 3 0.1% may be limited in its ability to deal with a complaint if we cannot locate the FSP despite our reasonable efforts to do so. 40

43 case studies case studies We recommended that the lender stay the eviction on the ground of personal hardship. The lender agreed Both the broker and lender were unable to provide us with any information which showed that they had made reasonable enquiries about Ms M s financial situation FINANCIAL ADVICE Mr and Mrs A approached a financial planner for advice about investing $285,000. They wanted to purchase a business within three years but wanted to invest the amount in a short term investment in the meantime. Their goal was to have a short term income supplement of $25,000 per year. The financial planner recommended several investments including investing $135,000 into an aggressive unlisted property trust with a projected annual return of 20% (which equated to $27,000 per year). 18 months after Mr and Mrs A invested in the unlisted property trust, the funds were frozen. They nonetheless received frequent notices assuring them the company would soon recover. Recently, administrators were appointed and Mr and Mrs A were informed that their investment would not be repaid. Mr and Mrs A made a complaint alleging that the financial planner provided them with inappropriate advice. The financial planner denied liability. He submitted that the advice was provided more than six years before so the complaint was made outside the required time. The financial planner also submitted that, in any event, the advice was appropriate because Mr and Mrs A had previously held growth assets and had a relatively aggressive risk profile. We decided the complaint was made within time because it was made within six years of Mr and Mrs A first becoming aware of their loss. The investment in question was projected to return $27,000 per year. Thus, the entire income supplement which Mr and Mrs A sought was projected to be provided from this one investment. In addition, we considered that a reasonable person would see this as very aggressive for a short term investment. Consequently, we took the view that the investment was far more riskier than was required to achieve Mr and Mrs A s goals. We provided the parties with a formal written Recommendation recommending compensation for the failed investment. The financial planner did not agree with the Recommendation. The complaint was referred to the Ombudsman to review and he issued a Determination in terms consistent with the Recommendation. Mr and Mrs A received compensation for the full value of their complaint being a return of the $135,000 invested plus interest. Mr C was able to convert his loan to a variable rate loan without incurring the break cost fee. The lender also credited the difference in the interest 41

44 case studies UNAUTHORISED TRANSACTIONS Ms J had a transaction account with an approved deposit-taking institution (ADI) that could be accessed by a debit card and personal identification number (PIN). The ADI notified Ms J that the security of her debit card may have been compromised as a result of a scam. As a precaution, the ADI cancelled Ms J s debit card, issued her with a new one, and advised her to check the recent transactions on her account for unauthorised transactions. When Ms J checked her statements for the previous 18 months, she identified 60 transactions totalling almost $15,000 that she believed were unauthorised. All the disputed transactions were cash withdrawals made from automatic teller machines. Ms J made a claim with the ADI for reimbursement of the disputed transactions. By the time Ms J made her claim, the ADI had confirmed that Ms J s debit card had not been compromised as a result of the scam. In considering Ms J s claim, the ADI noted that Ms J s card was used for each of the disputed transactions and the correct PIN was entered on the first attempt each time. Ms J s claim was declined on the basis that: she had carried out the transactions, or she must have disclosed the PIN to another person. Ms J lodged a complaint with us. Ms J stated that her debit card had not been lost or stolen and that she had not disclosed her PIN to anyone or kept a copy of it with the card. Ms J also said that she only withdrew cash using EFTPOS because she was worried about scams at automatic teller machines. Our investigation indicated that: there was no evidence of Ms J s debit card being copied, there was no attempt to use Ms J s card once it was cancelled, Ms J s card and PIN was used for each of the transactions and the correct PIN was entered on the first attempt each time, the disputed transactions were often carried out on the same day as other undisputed transactions and in the same area, when Ms J was on holiday, the undisputed and the disputed transactions were carried out where she was holidaying, Ms J received account statements every three months and had not previously raised any concerns, the disputed transactions ranged between $150 and $500 and were always far less than the funds available in the account. We considered that if another person was using Ms J s card, they would have had to have taken it without her knowledge, used the debit card and returned it without her noticing on over 60 occasions. On the information available to us, we were unable to conclude that the disputed transactions were unauthorised. MOTOR VEHICLE REPOSSESSIONS Mr V s business was not doing very well and he fell behind on his business car loan. When the lender s agent came with a tow truck driver to repossess the car, Mr V asked the agent for a copy of the court order allowing the agent to repossess his car. The agent told Mr V that he did not have one. Mr V asked the agent and the tow truck driver to leave his property, however, the agent stayed on the property and the tow truck driver towed the car from Mr V s driveway. Mr V made a complaint to us asking for the return of the car and the chance to sell the car himself privately. He said that the lender did not have a court order and repossessed the car from his home without his consent. In view of the above, we made a formal written Recommendation that the lender: return the car to Mr V, reverse all the costs related to the repossession, and reverse any interest charged between the date of repossession and the date the car was returned (given that Mr V had not had the use of the car during that time). The lender eventually accepted our Recommendation and also Mr V s request for time to sell the car himself. The lender disagreed, stating that Mr V s contract included a term where Mr V gave his consent for the lender to enter Mr V s property to repossess the car. Our position was that, even if Mr V had given the lender or their agent consent to enter his property to repossess the car, he could withdraw his consent at any time. When the agent and the tow truck driver refused to leave his property despite being asked to, we considered that they were trespassing on Mr V s property. 42

45 case studies CREDIT DEFAULTS PAYMENT ARRANGEMENT WITH A CAR FINANCIER When Ms J separated from her husband, she contacted the credit card provider to inform them of this and to close her account. As far as she was aware, the account was closed. Ms J later checked her credit file and noticed a payment default for the non-payment of an outstanding debt from a joint credit card account issued by the credit card provider. The information on her credit file indicated that the debt had been assigned to a debt purchaser. In her complaint to, Ms J told us that she did not receive any statements or notices about the outstanding debt or that a payment default may be recorded on her credit file. When she raised her complaint with the original credit card provider, she was told that all the transactions for the outstanding debt were made by her ex-husband who was a joint account holder. She had not completed a release of liability form so she was jointly and severally liable for the outstanding debt. Ms J wanted the payment default removed from her credit file and not to be made responsible for the outstanding debt. During our investigation of the complaint, we noted that the original credit card provider s file notes referred to Ms J s ex-husband as the primary account holder and all the notices had been sent to him. Ms J could not recall whether she had applied to be a joint account holder or whether she was an additional card holder. We asked the debt purchaser to provide us with information to show that Ms J was a joint account holder, for instance, the credit card application form, statements, notices or other file notes. However, the debt purchaser was not able to provide us with any information to confirm this. For this reason and because the outstanding debt was incurred by Ms J s ex-husband after the credit provider was told of their separation, we recommended to the debt purchaser that they not pursue Ms J for the debt and to remove any payment defaults recorded on her credit file. The debt purchaser agreed. BREAK COST FEES Mr C applied to his lender to fix the interest rate on his existing loan for a period of five years. Two years later, the variable interest rate started to fall and Mr C approached the lender and asked them what the break cost fee would be if he were to convert his loan back to a variable interest rate. At that time, Mr C questioned the break cost fee formula that was disclosed in the contract. He said that the break cost fee formula was either incomplete or incorrect because the lender was unable to calculate the break cost fee. Consequently, Mr C requested that the break cost fee be waived. We agreed with Mr C and negotiated a favourable outcome for him. He was able to convert his loan to a variable rate loan without incurring the break cost fee. The lender also credited the difference in the interest from the time Mr C wanted to convert his loan and to when the lender actually converted his loan. When Mrs C was made redundant, Mr and Mrs C were still able to meet their car lease payments with the help of their savings. However, when three months had passed and Mrs C was still not able to find a new job, Mr and Mrs C started to fall behind on their car lease payments. When Mr and Mrs C approached us for help, Mr C initially wanted to make additional payments on top of the normal lease payments to catch up on the overdue payments. We sent Mr and Mrs C our hardship application questionnaire so Mr and Mrs C could provide us with information about Mr C s current income, Mr and Mrs C s expenses and a realistic indication of what they could afford. Mr C stated that he could afford $850 per fortnight, which was more than their fortnightly lease payments. The increased payments would enable Mr C to catch up on the overdue payments over the term of the lease. Mr and Mrs C s hardship application questionnaire indicated that they had many debts, including a home loan. After the mortgage payments were made, they did not have enough income left to meet their lease payments let alone the higher payments Mr C was proposing to make. On this basis, the car financier declined their hardship application. Mr C informed us that they were in the process of selling their home and this would leave the car financier as the only remaining creditor. We considered that Mr and Mrs C s proposal was reasonable because they were able to show that they could afford to make the higher payments. After some negotiation, the car financier agreed to accept their proposal to make the increased lease payments until the end of the lease contract. 43

46 case studies PAYMENT ARRANGEMENT WITH A LENDER PAYMENT ARRANGEMENT ORDERED When Ms K separated from her husband, she stayed in their home with her three children. Mr K moved out and stopped making payments to the home loan. Ms K worked part time and could not afford to make the loan payments on her own. As a result, the loan fell into arrears. During this time, Ms K and the lender were in continuous discussion about different payment arrangements to give Ms K time to settle her property matters with Mr K in the Family Court. After some time, Ms K entered into consent orders with Mr K. Under the consent orders, Ms K would refinance the home loan and Mr K would transfer his share of their home to her. Alternatively, Ms K would sell the home. Ms P became unemployed and started to fall behind on her mortgage repayments. She remained unemployed for some time and the lender started legal proceedings for possession of her home. At around the time the lender was granted default judgment for possession, Ms P found a new job, began making her minimum monthly repayments and made an application for the early release of superannuation to pay off the arrears. Ms P made a complaint to us asking for time for her application to be processed to pay off the arrears. However, by this time, the lender had instructed the sheriff and she was required to vacate her home in a few weeks. Under normal circumstances, we would not have been able to provide Ms P with more time to pay out the arrears. This is because the lender had obtained a court order for possession and we cannot overturn or vary a court order. However, Ms P informed us that she was a single mother with three children and needed more time to vacate the property. In these circumstances, we recommended that the lender stay the eviction and not reschedule it for a period of two weeks on the ground of personal hardship. The lender agreed to do so. During this time, we also discussed Ms P s current financial circumstances with the lender. The lender later agreed that as long as all the arrears were paid and the repayments were kept up to date going forward, they would not enforce the judgment for possession by requesting full payment of the debt. Ms P later received the early release of her superannuation and cleared her arrears. Soon after, Ms K obtained a second job and began meeting her full mortgage payment obligations. However, she was not in a position to pay the arrears which had accumulated on the loan. With the consent orders in place, Ms K applied to the lender to capitalise the arrears on the loan. The lender declined Ms K s request because they believed that her request was inconsistent with the consent orders. The lender also informed us that the mortgage insurer did not agree to capitalise the arrears. Ms K provided us with account statements and payslips to show that she was making her mortgage payments and she was able to make the future payments. In addition, she informed us that she wanted to refinance the loan but could not do so because her loan statements indicated that she was in default of her loan obligations. We informed the lender that we considered that it was reasonable for them to capitalise the arrears on the loan and recommended that they did so. We did not consider that the lender was a party to the consent orders and so would not be seen to be breaching its terms if they agreed to capitalise the arrears. Indeed, Ms K was not able to refinance unless the lender capitalised the arrears on the loan. In addition, Ms K was able to show that she could meet her payment obligations under the loan if the arrears were capitalised. We referred the lender to the National Credit Code which makes no reference to mortgage insurance as a relevant consideration when assessing hardship applications. The lender did not agree with our recommendation. Consequently, the Ombudsman issued an Order requiring the lender to capitalise the arrears on the loan. 44

47 case studies TIMESHARE FINANCIER AND ENFORCEMENT COSTS Mr and Mrs L entered into a loan with a financier to fund 20,000 vacation credits purchased with a timeshare provider. A year later, Mr and Mrs L began to experience difficulties in making the scheduled monthly loan repayments and eventually defaulted on their loan. The financier sent a default notice to both Mr and Mrs L individually. When Mr and Mrs L did not comply with the default notice, the financier took possession of and sold the vacation credits. The financier later wrote to Mr and Mrs L and provided them with the following information: Mr and Mrs L owed the financier $9,000, the financier had received $10,000 from the sale of the vacation credits, they had incurred enforcement costs totalling $6,000, after deducting the enforcement costs from the sale price, Mr and Mrs L remained liable to repay the shortfall amount of $5,000. Sometime later, the financier listed a default on Mr and Mrs L s credit files for an overdue amount of $5,000. Mr and Mrs L made the following claims against the financier: the financier deducted unreasonable enforcement costs from the sale of the vacation credits, and Consequently, we issued a formal written Recommendation which found that the financier was not able to demonstrate that they incurred any enforcement expenses in relation to the sale of the vacation credits. Accordingly, if the FSP had sold the vacation credits for $10,000 and did not incur any enforcement expenses, the gross sale proceeds should have been applied as follows: to discharge Mr and Mrs L s outstanding debt (which at the time of sale totalled $9,000), and the remaining $1,000 ought to have been remitted to them. To resolve the complaint, recommended that the financier: pay to Mr and Mrs L $1,000 plus interest, and remove the defaults listed on their credit files. Mr and Mrs L accepted our Recommendation; however the financier did not. Consequently, the complaint was referred to the Ombudsman for Determination. The Ombudsman reviewed the complaint and came to the same conclusion. As a result of the Determination, the financier paid Mr and Mrs L $1,000 plus interest and removed the defaults listed on their credit files. the financier did not provide an itemised account of the enforcement costs. The financier failed to produce any documentation that would enable us to verify the amount the financier said they received from the sale of the vacation credits or the enforcement costs they said they incurred. DELAYED SETTLEMENT Ms C had an investment loan with a lender. She decided to refinance her loan with a new lender who was offering a fixed interest rate of 6.99% p.a. for a term of three years. She paid for a rate lock agreement which secured the fixed interest rate of 6.99% p.a. for three months pending settlement of the loan. The new lender sent a discharge request to Ms C s current lender so that they could prepare the discharge of Ms C s existing loan. The current lender then instructed their solicitors to prepare for settlement. Due to the solicitors for the existing lender misplacing the security packet (which contained the title to the security property), the refinance could not take place and settlement was delayed for over a month, by which time Ms C s rate lock agreement had expired. We considered that if the lender s solicitors had not misplaced the security packet, Ms C would have been able to refinance her loan at a fixed interest rate of 6.99% p.a. rather than at 7.29% p.a. Although the lender initially tried to argue that some responsibility rested with Ms C in proceeding with the higher fixed interest rate, they ultimately offered to refund the approximate difference in interest on the new loan over the three year fixed rate period as well as an additional $500. Ms C accepted the offer in resolution of her complaint. Eventually, the solicitors located the security packet and the refinance took place. Unfortunately, by this time the fixed interest rate applying on Ms C s new loan had risen to 7.29% p.a., and the 6.99% p.a. rate was no longer available. 45

48 case studies RESPONSIBLE LENDING From March 2011 onwards, Ms M engaged a broker who arranged 14 loans for her with the same small amount lender. The question arose whether the broker and lender had complied with their responsible lending obligations under the National Consumer Credit Protection Act 2009 (Cth) (NCCP). Our preliminary review of the complaint was that they had not. The information available to us showed that Ms M could not have met her financial obligations under the loans. In particular: 1. Both the broker and lender were unable to provide us with any information which showed that they had made reasonable enquiries about Ms M s financial situation before each loan was entered into. The lender also informed us that its procedure at the time was that a new loan application was only required to be completed once every six months. The previous loan application would be relied on for any new loan applications. In Ms M s case, only two loan applications were completed for 14 loans. As such, we considered that the lender did not make reasonable inquires about her financial situation at the time she applied for each loan. 2. Both the broker and lender were unable to provide us with any information which showed that reasonable steps were taken to verify her financial situation. Around the time that Ms M entered into the loans, her bank account statements disclosed that she had approximately four other small amount loans. We also understood that Ms M was a single parent with three dependent children. There was no information which indicated that either the broker or lender turned their mind to Ms M s other debt obligations and the cost of Ms M s general living expenses when verifying and assessing Ms M s financial situation at the time she applied for each loan. Our preliminary review found that the loans were unsuitable. The broker should not have assisted and the lender should not have provided the loans to Ms M. Consequently, we made a formal written Recommendation that any interest, fees and charges, less any principal amount outstanding for each loan be either waived and/or refunded. All the parties agreed to our Recommendation and Ms M received a refund of $2,

49 systemic issues systemic issues & serious misconduct Our role as a dispute resolution scheme approved by the Australian Securities and Investments Commission (ASIC), requires us to report systemic issues and serious misconduct which we identify when investigating a complaint. SERIOUS MISCONDUCT This type of conduct can include fraud, unconscionable or grossly negligent conduct, or a failure to act honestly, efficiently and fairly. Broadly speaking, we classify these as follows: SYSTEMIC ISSUES These are issues which have potential implications for persons beyond the immediate parties to a complaint (including other instances where the FSP s conduct has caused financial loss, or could result in a loss of consumer confidence in the FSP s products and services). We may identify a systemic issue from dealing with a single complaint (for example, where a standard form contract fails to disclose a fee that the consumer is paying). Alternatively, we may do so after receiving a number of complaints containing similar claims (for example, where an Australian Financial Services Licensee s representative has advised consumers to acquire the same complex/high risk financial product, irrespective of the consumers differing goals and objectives. We also consider that this concept extends to a FSP s compliance with its obligations under the Rules, including providing information and documents within the time specified and staying enforcement action until has finished dealing with the complaint. We aim to work collaboratively and effectively with FSPs in resolving these matters as and when they arise. In doing so, we aim to: work with FSPs to improve industry practices, ensure that consumers who have suffered financial loss (and who may not have complained about the problem) are compensated appropriately, prevent further loss to consumers, eliminate or minimise the risk of the problem recurring, and efficiently deal with multiple complaints about a single problem (where this occurs). How we deal with systemic issues and serious misconduct Generally, we follow a three-step process (and this can occur at any stage of the process): 1. Identify If, during our investigations, we come across an issue of concern, we make an initial assessment as to whether it could constitute a systemic issue or serious misconduct. We may ask the FSP to provide us with additional information to assist us in our assessment. 2. Refer Having formed a view that the issue is a potential systemic issue or serious misconduct, we refer it to the FSP for remedial action. At this stage, we will: write to the FSP informing it of our views and the information we have relied on, and work with the FSP, as far as is practicable, to ensure that the issue is addressed. 3. Report The FSP is required to provide us with a report that details its response to the issue raised, which we then provide to ASIC. We usually report systemic issue activity to ASIC on a de-identified basis (particularly where the FSP has resolved the issue in a satisfactory manner). However, those FSPs which have been found to engage in serious misconduct are reported on an identified basis. 47

50 systemic issues our investigations into systemic issues and serious misconduct over the year MORTGAGE BROKER ENGAGING IN MISCONDUCT UNDER NATIONAL CONSUMER CREDIT PROTECTION ACT AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION ACT In last year s report, we noted that we were investigating a number of complaints made against a mortgage broker, in which it was alleged that the broker promoted the sale of certain properties to consumers and then arranged unsuitable loans for the consumers to enable their purchase. Having concluded our investigation, we found that the broker: misled consumers in relation to: the value of the investment property, the consumers ability to afford the finance required to complete the property purchase, and the investment return generated by the gearing strategy (e.g. rents received and tax savings were lower than that represented by the broker), in those cases where the broker could not arrange sufficient primary finance through a mainstream lender (to enable the consumer to complete the purchase), the broker assisted the consumers to obtain secondary finance through the vendors (or entities connected to them). This secondary finance was, in most cases, short-term, subject to high interest rates, and, in many cases, only served to compound the consumers existing financial hardship. ASIC took regulatory action against the broker during the year, and, among other things, the Ombudsman issued a Determination awarding $250,000 (plus interest) compensation to a consumer for loss found to have been caused by the broker s negligent and unconscionable conduct. INAPPROPRIATE AND CONFLICTED FINANCIAL ADVICE GIVEN BY REPRESENTATIVES OF AN AFSL We received a number of complaints from consumers regarding advice given by two authorised representatives (ARs) of an Australian Financial Services Licensee (AFSL). Generally, the complaints contained the following claims: the ARs provided the consumers with inappropriate advice in relation to investments and the establishment of self-managed superannuation funds, the ARs provided financial advice without also providing consumers with the necessary disclosure documentation (i.e. Statements of Advice, Product Disclosure Statements, etc.), the ARs recommended the consumers invest in property development schemes in which the ARs had undisclosed commercial interests, transactions to buy or sell investments were made without the consumers authorisation, and the value of investments were improperly written down by an entity controlled by the ARs. Our investigation into these matters is ongoing. CONCERNS WITH MOTOR VEHICLE FINANCE PROVIDER S CONTRACTS, SALE PROCESSES AND DEFAULT LISTING PROCEDURES We are currently investigating a group complaint made by a number of consumers (represented by a consumer legal service), involving a motor vehicle finance provider s products and services. Among other things, it is alleged that: the finance contracts are unjust and/or unconscionable, the finance contracts contain unfair terms, a finalisation amount payable under the finance contract is a penalty and therefore unenforceable, and the motor vehicle finance provider failed to comply with its responsible lending obligations under the National Consumer Credit Protection (NCCP) Act. We are also reviewing the motor vehicle finance provider s process of recording serious credit infringements on consumers credit reports, following concerns that it may not have had a basis for doing so in some instances. 48

51 systemic issues LENDER S TERMS AND CONDITIONS FOR CHARGING A FEE UNCERTAIN In the course of dealing with several complaints against this lender, we identified an issue arising from its disclosure and charging of an administration fee under its standard form loan contract. Although the contract states that the administration fee is incurred at the date of signing this Contract, in some cases, the lender charged the fee to the consumer s loan at the establishment of the loan. In other cases, the lender charged the fee incrementally over the term of the loan. There was no other term or condition in the loan contract explaining its operation. FSPS WHO FAIL TO COMPLY WITH THE PROCESS Over the year, we sent Notices to Comply to a number of FSPs who had failed to provide information to in relation to complaints made against them, or who were otherwise constantly tardy in responding to complaints. Although we successfully worked through these issues with most of the FSPs concerned, a small number remained uncooperative, and at least one was expelled as a member of on this basis. We considered that if the administration fee was to cover the lender s costs of establishing the loan, then it was reviewable as an establishment fee under section 78(3) of the National Credit Code (NCC). However, if it was intended to be a weekly administrative fee, it appears that the standard form contract failed to comply with the disclosure requirements provided for under section 17(8) of the NCC. The lender s responses failed to address our concerns and we notified ASIC accordingly. IMPROPER REPOSSESSION OF MOTOR VEHICLES We are investigating a number of complaints in which, amongst other things, it appears that the credit provider (through its mercantile agent) has improperly repossessed vehicles which secure loans from the consumers homes We consider that the credit provider committed a trespass to the consumers property by having its agent repossess the vehicles in circumstances where: the consumers had not consented to the credit provider s agent entering on to their property to repossess the vehicle, and the credit provider did not have a court order which entitled it to take this action. DEBT COLLECTION AGENCY SENDING LETTERS ADDRESSED TO THE HOUSEHOLDER We identified that a debt collection agency had a practice of sending consumers letters addressed to The Householder, but with the details of the consumer and a request to contact the agency contained inside. The agency knew that the letters were being sent to the consumer s mailing address; however, the agency hoped that it would prompt consumers who had otherwise been incommunicative into contacting it to discuss the debt. We raised concerns that this practice may be inconsistent with the agency s privacy obligations to the consumer (and third parties), as set out in the debt collection guidelines published in ASIC s Regulatory Guide 96. The agency ceased engaging in this practice following our referral of the matter to it. 49

52 complaint report complaint report 50

53 complaint report FINANCIAL SERVICES PROVIDER (FSP) COMPLAINT STATISTICS The data is for the period between 1 July 2012 to 30 June The number and nature of complaints we receive about FSPs are influenced by a number of factors, including: the size of the FSP s business: larger FSPs will generally receive more complaints than smaller FSPs, and the period of the FSP s membership with : some FSPs may not have been participants for the full membership year (our complaint numbers are actual figures and have not been adjusted to take this into account). Some complaints may have been recorded against a FSP, although they relate to acts or omissions by another organisation, because: the FSP had been contracted to manage some aspect of the other organisation s business, the FSP purchased or assigned the debt from or to the other organisation, the FSP acquired the other organisation's business, or the FSP is an Australian Credit Licensee (ACL) holder or an Australian Financial Services Licensee (AFSL) holder and the other organisation was a credit representative or an authorised representative of the FSP at the time the event giving rise to the complaint arose. Time lag There is a time lag between receiving a complaint and closing it. As such, the complaints closed during the reporting period may have been received in a previous reporting period. The time lag varies from complaint to complaint. This means that the figures for the outcome of complaints in a single period may not, on their own, be significant but the trend over several periods could be. Internal dispute resolution (IDR) We have not included complaints received by us where the FSP did not have the opportunity to address the complaint within their IDR process. FSPs who have not been included We have not included data where we received three or less complaints against a particular FSP, unless we closed more than three complaints against the FSP in the same reporting period. As a result, 316 FSPs who received less than four complaints are not named in this report. They represent 74.0% of all FSPs who received complaints, 1.8% of all FSPs and 17.6% of all complaints received by us. Classification We have classified complaints received according to the type of financial service they relate to. For a general breakdown of the number of complaints received according to financial services, please refer to page 23. We have categorised complaints closed according to their outcome. For a general breakdown of outcomes, please refer to pages FSP membership changes Any FSP noted in the report with either of the symbols below indicates: * FSP commenced membership with after 1 July ** FSP ceased membership with prior to 30 June FSPs who received less than four complaints are not named in this report. They represent 74.0% of all FSPs who received complaints, 1.8% of all participating FSPs and 17.6% of all complaints received by us 51

54 complaint report DEFINITIONS Discontinued A complaint where: we did not receive a response from the consumer to our communications, despite our repeated attempts to contact them, the consumer withdrew the complaint, or the complaint was redirected to a more appropriate respondent. Outside of jurisdiction We could not deal with the complaint under the Rules. For more information on the grounds on which a complaint may be outside of our jurisdiction, please refer to pages 39 and 40. Resolved by agreement The complaint was resolved with the consumer and the FSP agreeing to an outcome. This may involve : investigating the claims raised by the consumer, making informal recommendations to the parties as to how the complaint should be resolved, facilitating negotiations between the parties, and/or conducting a conciliation conference. Decision in consumer s favour The complaint was resolved with making a formal written decision in the consumer s favour after a full investigation of the complaint. Before making a written decision, we inform the FSP of our position. Most of the time, the FSP will agree to provide the consumer with the outcome we recommend, the complaint is resolved by agreement and a formal written decision is not required. If the FSP does not accept our informal recommendation, we will provide the parties with a formal written decision which may be a: Expedited Ruling: A Ruling can be issued for small claims of less than $3,000. If the consumer accepts the Ruling, the FSP is bound by the decision in the Ruling. If the consumer does not accept the Ruling, the consumer is not bound by the decision in the Ruling. The complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. Recommendation: A Recommendation includes what considers to be a fair outcome to resolve the complaint. Neither the consumer nor the FSP is bound by the Recommendation. If the consumer and the FSP do not accept the Recommendation, the complaint may be referred to the Ombudsman for a Determination. Determination: A Determination is issued by the Ombudsman in the final stage of the process. If the consumer accepts the Determination, the FSP is bound by the decision in the Determination. If the consumer does not accept the Determination, the consumer is not bound by the decision in the Determination. The complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. Decision - complaint not substantiated The complaint was resolved with making a formal written decision in the FSP s favour after a full investigation of the complaint. The consumer is provided with our reasons for making the decision to close the complaint and afforded an opportunity to object to our decision. 52

55 complaint report MOTOR VEHICLE FINANCE PERSONAL FINANCIAL ADVICE CONSUMER MORTGAGES COMMERCIAL TOTAL RECEIVED Lease/Hire Purchase Loan Personal Loan Credit Card Debt Services Consumer Retail Finance Savings Account Other Financial Planning and Investments Timeshare Lenders Mortgage Insurance Mortgage Reverse Mortgage Mortgage Equipment Finance TOTAL CLOSED Resolved by Agreement Decision in Consumer s Favour Discontinued Decision -Complaint Not Substantiated Out of Jurisdiction annual complaint report FINANCIAL SERVICES PROVIDER TRADING NAME MEMBERSHIP COMMENCED RECEIVED CLOSED FINANCIAL PLANNERS & ADVISERS Anne Street Partners Financial Services Pty Ltd Anne Street Partners Financial Services 25/8/ Australian Financial Services Ltd ** 23/6/ JB Global Pty Ltd JB Global Investment Services 18/10/ WealthSure Pty Ltd WealthSure Financial Services 18/12/ AUTHORISED DEPOSIT-TAKING INSTITUTIONS Bananacoast Community Credit Union Ltd Bananacoast Community Credit Union 7/10/ Defence Bank Ltd Defence Bank 12/10/ Greater Building Society Ltd 25/9/ Newcastle Permanent Building Society Ltd 30/9/ Qantas Staff Credit Union Limited 7/10/ RESIDENTIAL LENDERS & MORTGAGE MANAGERS Advantedge Financial Services Pty Ltd Advantedge 21/10/ AFIG Wholesale Pty Ltd GE Money 14/5/ AIMS Home Loans Pty Ltd AIMS Home Loans 1/7/ AMS Mortgage Services Pty Ltd 1/7/ Aussie Home Loans Pty Ltd Aussie 1/7/ Australian Finance Group Ltd AFG 1/7/ Australian First Mortgage Pty Ltd Australian First Mortgage 1/7/ Bluestone Equity Release Pty Ltd Bluestone 13/4/ Bluestone Mortgages Pty Ltd Bluestone 1/7/ Columbus Capital Pty Ltd Columbus Capital 4/1/

56 complaint report MOTOR VEHICLE FINANCE PERSONAL FINANCIAL ADVICE CONSUMER MORTGAGES COMMERCIAL TOTAL RECEIVED Lease/Hire Purchase Loan Personal Loan Credit Card Debt Services Consumer Retail Finance Savings Account Other Financial Planning and Investments Timeshare Lenders Mortgage Insurance Mortgage Reverse Mortgage Mortgage Equipment Finance TOTAL CLOSED Resolved by Agreement Decision in Consumer s Favour Discontinued Decision - Complaint Not Substantiated Out of Jurisdiction annual complaint report FINANCIAL SERVICES PROVIDER TRADING NAME MEMBERSHIP COMMENCED RECEIVED CLOSED Equity-One Mortgage Fund Ltd 2/3/ Firstfolio Capital Pty Ltd 7/4/ nil Firstfolio Ltd 1/4/ Firstfolio Wholesale Pty Ltd 18/1/ Firstmac Ltd ** 7/1/ Fox Symes Home Loans (Services) Pty Ltd 11/2/ GE Mortgage Solutions Ltd 1/7/ Homeloans Ltd 1/7/ Homestart Finance Corporation 1/7/ Jacaranda Cooperative Housing Society Ltd 19/6/ Keystart Loans Ltd 1/7/ La Trobe Financial Services Pty Ltd 1/7/ Liberty Financial Pty Ltd Liberty Financial 1/7/ MKM Capital Pty Ltd 2/8/ Mortgage Ezy Pty Ltd Mortgage Ezy 1/7/ National Mortgage Company Pty Ltd National Mortgage Company 1/7/ Pepper Australia Pty Ltd Pepper Homeloans 8/2/ Pepper Finance Corporation Ltd Pepper Homeloans 29/6/ Pepper Homeloans Pty Ltd Pepper Homeloans 1/7/ RedZed Lending Solutions Pty Ltd 12/4/ Resimac Ltd 1/7/ Royal Guardian Mortgage Corporation Pty Ltd 1/7/ SECURITISERS GPAC Australia Pty Ltd 13/4/ Secure Funding Pty Ltd 1/3/ BROKERS AHL Investments Pty Ltd Aussie 23/7/ BLSSA Pty Ltd 11/6/

57 complaint report GMS Group (VIC) Pty Ltd 1/7/ Loan Market Group Pty Ltd Loan Market 31/10/ Money Choice Pty Ltd 21/6/ Mortgage Choice Ltd Mortgage Choice 18/1/ Paymay Pty Ltd 2/6/ REVA Broking Pty Ltd 18/1/ Smartline Operations Pty Ltd Smartline 18/5/ Stratton Finance Pty Ltd 13/7/ Union Fidelity Capital Funding Pty Ltd ** 19/8/ COMMERCIAL LENDERS BOQ Funding Pty Ltd BOQ Finance 27/10/ Howard Commercial Lending Ltd 9/1/ NCF Financial Services Pty Ltd NCF Financial Services 28/2/ DEBT PURCHASERS & SERVICERS ACM Group Ltd 25/5/ ACN Pty Ltd Great Western Asset Management 3/6/ Axess Debt Management Pty Ltd 30/6/ Baycorp Collections PDL (Australia) Pty Ltd Baycorp 1/2/ CDDS Pty Ltd State Mercantile 8/9/ Credit Corp Collections Pty Ltd * 23/7/ NCO Finance (Australia) Pty Ltd * 16/7/ Panthera Finance Pty Ltd 14/12/ Pioneer Credit Acquisition Services Pty Ltd Pioneer Credit Acquisition Services 18/12/ Recoveries Corporation Pty Ltd 11/8/ Shield Mercantile Pty Ltd Shield Mercantile 28/8/ LENDERS MORTGAGE INSURANCE PROVIDERS Genworth Financial Mortgage Insurance Pty Ltd Genworth 1/7/ QBE Lenders Mortgage Insurance Ltd 1/6/ CONSUMER RETAIL FINANCE PROVIDERS Lombard Finance Pty Ltd 8/12/ Technology Leasing Ltd Technorent 24/3/ Thorn Australia Pty Ltd Radio Rentals; Rentlo; Cashfirst 16/6/

58 complaint report MOTOR VEHICLE FINANCE PERSONAL FINANCIAL ADVICE CONSUMER MORTGAGES COMMERCIAL TOTAL RECEIVED Lease/Hire Purchase Loan Personal Loan Credit Card Debt Services Consumer Retail Finance Savings Account Other Financial Planning and Investments Timeshare Lenders Mortgage Insurance Mortgage Reverse Mortgage Mortgage Equipment Finance TOTAL CLOSED Resolved by Agreement Decision in Consumer s Favour Discontinued Decision - Complaint Not Substantiated Out of Jurisdiction annual complaint report FINANCIAL SERVICES PROVIDER TRADING NAME MEMBERSHIP COMMENCED RECEIVED CLOSED Walker Stores Pty Ltd InRent; In-Lease; Diamond Rental Refresh; Radio Rentals SA 7/6/ SMALL AMOUNT SHORT TERM LENDERS Assistive Finance Australia Pty Ltd 25/2/ Cash Converters (Cash Advance) Pty Ltd Cash Converters (Cash Advance) 6/7/ Cash Converters Personal Finance Pty Ltd Cash Converters Perth 12/2/ Cash Converters Pty Ltd Cash Converters 17/11/ Nimble Australia Pty Ltd Cash Doctors, Payday Online, Payday Cash Loan 2/10/ Safrock Finance Corporation (QLD) Pty Ltd 10/12/ Sunshine Loan Centres Pty Ltd 22/12/ The Cash Store Pty Ltd 26/26/ /2/ MOTOR VEHICLE FINANCE PROVIDERS BMW Australia Finance Ltd BMW Financial Services 27/2/ DTG N1 Pty Ltd N1 Leasing: Motor Finance Wizard St Marys 8/6/ DTG Q1 Pty Ltd Q1 Leasing: Motor Finance Wizard Stacks Creek 8/6/ DTG V1 Pty Ltd V1 Leasing; Motor Finance Wizard Maidstone; Motor Finance Wizard Dandenong 8/6/ Green Light Auto Group Pty Ltd 6/5/

59 complaint report KWIK Finance (QLD) Pty Ltd Motor Finance Wizard 8/6/ KWIK Finance Pty Ltd Motor Finance Wizard 8/6/ Nat Credit 1 Pty Ltd 16/6/ Nissan Financial Services Australia Pty Ltd Nissan Financial Services; Renault Financial Services; Infiniti Financial Services 23/5/ R.A.C.V. Finance Ltd RACV 2/7/ Volkswagen Financial Services Australia Pty Ltd Volkswagen Finance, Audi Finance, Skoda Finance, Lamborghini Finance, Bentley Motors Finance 19/4/ PERSONAL LENDING PROVIDERS Amazing Loans SPV Pty Ltd ** Amazing Loans 11/5/ BOQ Credit Pty Ltd BOQ Finance 27/10/ EM Finance Corporation Pty Ltd 8/12/ Menswear Finance Co Pty Ltd Lowes Manhattan 11/10/ TIMESHARE PROVIDERS AND FINANCIERS A.P.V.C Ltd Accor Vacation Club 14/6/ Finance by Wyndham Pty Ltd 30/6/ Future Holiday Finance Pty Ltd Future Holiday Finance 10/11/ Holiday Club Pacific Ltd 23/4/ Wyndham Vacation Resorts Asia Pacific Pty Ltd 3/2/ Wyndham Vacation Resorts South Pacific Ltd World Mark South Pacific Club 30/6/ OTHER Credit Repair Australia Pty Ltd 10/1/ Fox Symes & Associates Pty Ltd Fox Symes & Associates 13/10/ Smartsalary Pty Ltd Smartleasing 16/6/ United Warranties Pty Ltd ** 29/12/

60 engagement engaging with our stakeholders ACCESSIBILITY The website The website is an important tool and resource for FSPs, consumers and various support service providers. On 29 May 2013, launched a new user friendly website with enhanced functionality and layout. The new website improves the user experience with easier navigation, allowing visitors to quickly access information and resources. In order to operate as an accessible, efficient, effective and fair dispute resolution service, engages with its stakeholders extensively. has a broad spectrum of stakeholders including consumers, financial services providers (FSPs), various industry sectors, consumer and government bodies and the broader general public. We continue to engage with our stakeholders by: increasing awareness of in the community, educating stakeholders about our service, aims, processes and approach to issues, undertaking consultations, surveys and reviews, presenting in a variety of forums, and contributing to policy discussions around issues relating to the financial service industry and dispute resolution, as well as broader issues that relate to the work we do. We undertake these activities through a range of events, promotions, website resources, publications, policy submissions, media releases and a range of other channels. On our website, consumers can use an improved search function to identify the complaints contact person of their FSP. This is particularly useful where the consumer only knows, or has only been dealing with, an employee or former contractor of the FSP. Consumers can also make a real-time complaint online if the FSP has been unable to address their concerns. will continue to develop the website s functionality so FSPs can directly update their details, apply for membership or renew their membership. In the financial year, our website received 50,151 unique page visits and 96,197 pages were accessed in total. Visits 96,197 Pages per visit 5.71 Average visit 3:04 min duration New visitors 50,151 Returning visitors 46,046 Bounce rate 4.4% Mobile visits 5,709 58

61 engagement Online Complaint Form A significant feature of our new website is the improved FSP search functionality and more user friendly online complaint form. We have now completed our first phase of integration between the website and our complaint and membership database. At the time a complaint is submitted online, it is instantly registered on our complaint database and an containing a copy of the complaint is sent to the party who lodged it. Consumer Forum In October 2012, held a Consumer Consultation Forum, inviting financial counsellors, consumer advocates, community lawyers and other support service providers. The aim of the Forum was to assist consumer stakeholders to gain a better understanding of the work undertakes, our complaint jurisdiction, processes and procedures. The day provided a great opportunity for attendees to ask specific questions, present case examples and scenarios for feedback and discussion by case managers. The Forum was well attended by a cross section of stakeholders. The need to continue with similar consultations and forums was shared by all who participated. will hold a number of similar forums over the next 12 months. FINANCIAL COUNSELLORS continued to attend financial counsellor conferences held throughout the year. also sponsored the National FCA Conference and the state association events (SA, NSW, QLD and WA). At each of these events, staff made presentations, participated in panel discussions, managed a stand providing information about the scheme and answering any queries from delegates. CULTURALLY AND LINGUISTICALLY DIVERSE AUSTRALIANS EVENTS staff attended and participated in over 150 events in This involved giving a range of presentations, running workshops, attending meetings and conferences, together with hosting information stalls and stands at a variety of consumer and industry based events throughout the year. Most notably, again hosted stands at events such as the Mortgage and Finance Association of Australia (MFAA) Convention, Financial Counselling Australia (FCA) Conference as well the annual External Dispute Resolution (EDR) Forum. It is important that our services are accessible and open to the broad range of people that make up the Australian consumer public. We publish basic information about our services on the website in a range of community languages and offer for consumers to contact us using the telephone interpreter service. EXTERNAL DISPUTE RESOLUTION FORUM again participated in the annual EDR Forum, held in Sydney on 20 May The forum was hosted by FCA and provides an opportunity for financial counsellors, consumer lawyers and other community workers a chance to engage with EDR schemes such as. FINANCIAL HARDSHIP Across Australia, we presented at several financial counsellor training days, community legal centre seminars, first home buyer expos and consumer conferences. We continue to work closely with consumer advocates and financial counsellors to facilitate a more integrated and effective approach to dealing with financial hardship complaints. We consider these complaints warrant top priority within our complaint management processes. To ensure consumers are able to access us in times of financial hardship, we allow them to ask for more than one hardship variation during the life of their credit contract, where appropriate, by treating each hardship application as a new complaint. 59

62 engagement We have a position statement (Position Statement 2) aimed at explaining to our FSPs our approach in dealing with consumers in financial hardship. This appears to have been well received by industry. INDUSTRY ENGAGEMENT is committed to ensuring we are accessible to FSPs as well as consumers. We continue to do this by regularly meeting FSPs to foster an environment of open communication, collaboration and information sharing. Integral to the effective and efficient handling of complaints is building strong working relationships with those FSPs who participate in the scheme. Throughout the year, we continued to meet regularly with high complaint volume participants of the scheme. We also undertook a variety of opportunities to engage numerous FSPs through presentations at a variety of industry conferences including the MFAA Convention, Credit Law Conference, National Financial Services Federation (NFSF) Annual General Meeting together with a range of road-show events and FSP professional development days in several states. PUBLICATIONS Complaint Decisions and Recommendations on website We have published some of our recent decisions on our new website, on a de-identified basis. This provides consumers and FSPs an insight into how we approach particular issues, the considerations we take into account and how we arrive at our decisions. The decisions published include unjust contracts under the National Credit Code, unconscionable conduct in lending, unauthorised transactions on credit card accounts and breaches of National Credit Code key requirements. We aim to continue publishing these documents on the website to cover the broad range of financial services complaints and issues the scheme handles. News POLICY WORK We were consulted on the development of the new national credit legislation and continue to contribute to the policy development in this area. We maintain close and regular contact with the Australian Securities and Investments Commission (ASIC), both in its capacity as the regulator of the financial services and credit sectors, as well as the body which monitors our compliance with the conditions of our approval to operate as an EDR scheme. We are required to: report to ASIC any systemic issues and matters involving serious misconduct by a FSP, and collect and report information to them about complaints we receive on a quarterly basis and in our annual report. SUBMISSIONS We continued to contribute to policy development in the financial services sector. We made a number of submissions to a variety of areas, these are listed below. Consultation on Draft Credit Reporting Code (May 2013) The Regulation of Point of Sale Vendor Introducers (May 2013) Review of the Benchmarks for Industry-Based External Dispute Resolution Schemes (June 2013) Response to Richard St John s report (July 2012) issues newsletters for consumers and FSPs every two months. The newsletter content is tailored to consumers and FSPs respectively. The newsletters inform consumers and FSPs of changes within and other important information. Since July 2013, newsletters feature a new interactive design that makes it easier for users to navigate through the content and find out more about their topics of interest. Those wishing to receive either one of the newsletters can do so by subscribing on our website at 60